Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Equity Analyst with 15+ years of experience as a Buy Side analyst covering companies in the Emerging and Developed markets.
Fundamental and Quantitative analysis on companies in the Internet, Telecommunication, Media, Technology, IT Services, Healthcare, Pharmaceutical and other Industrial sectors.
Idea generation focussed on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Global Emerging Market Equities

Tencent (700 HK): Growth Will Be Back to Level Before Pandemic, But Still Healthy, Buy

Tencent (700 HK): Take a Deep Breath and Reassess: Online Game Growth Is Slowing

Tencent: Earnings Beat Consensus; Falling User Growth and Game Revenue Growth Concerning

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<p>Although <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> has still significantly outperformed both <a href="https://www.smartkarma.com/entities/netease" target="_blank" data-smartkarma-citation="entities:29030:1" rel="noopener">NetEase (9999 HK)</a> and the <a href="https://www.smartkarma.com/entities/hong-kong-hang-seng-index" target="_blank" data-smartkarma-citation="entities:22899:1" rel="noopener">Hong Kong Hang Seng Index (HSI INDEX)</a> on a 12month basis, it has significantly lagged over, especially, the past 3months as we have witnessed increased anti-monopoly regulatory efforts from the State Administration for Market Regulation (SAMR) as well as the possibility of a regulatory-induced restructuring of its financial services operations along with the prospect for slowing games revenue growth (which still contributes 32% to Group Revenue and &gt;50% to Group Gross Profit). </p><p>In this insight, I take a closer look at the Chinese online games industry, its long-term opportunity in the context of the global games industry, and the relative performance of key games developers and publishers. With online games revenue growth set to decelerate significantly this year, of the high base set during the stay-at-home COVID-19 impacted 2020, Tencent should be able to draw on its competitive advantages to continue its relative outperformance.</p>

Although Tencent (700 HK) has still significantly outperformed both NetEase (9999 HK) and the Hong Kong Hang Seng Index (HSI INDEX) on a 12month basis, it has significantly lagged over, especially, the past 3months as we have witnessed increased anti-monopoly regulatory efforts from the State Administration for Market Regulation (SAMR) as well as the possibility of a regulatory-induced restructuring of its financial services operations along with the prospect for slowing games revenue growth (which still contributes 32% to Group Revenue and &gt;50% to Group Gross Profit). In this insight, I take a closer look at the Chinese online games industry, its long-term opportunity in the context of the global games industry, and the relative performance of key games developers and publishers. With online games revenue growth set to decelerate significantly this year, of the high base set during the stay-at-home COVID-19 impacted 2020, Tencent should be able to draw on its competitive advantages to continue its relative outperformance.

Tencent: A Closer Look at the Online Games Market and Its Relative Strength as Revenue Growth Slows